Barclays predicts a 30-40bps climb in mortgage rates per year

But it'll be gradual, it said.

According to Barclays, one of their banks analysts, Sharnie Wong, expected mortgage rates will rise independent of US interest rate hikes, due to tightening system liquidity in Singapore and should MAS raise mortgage risk weightings.

"We believe, if any, it would be a gradual rise of 30-40bps a year. Channel checks show home loan rates have risen only marginally although the spread in the
SIBOR-plus home loan packages has risen 25-35bps over the past year as SIBOR, tracking US rates, has remained low," Barclays said.

"Our sensitivity analysis shows that should mortgage rates double from the current 1.5%, monthly mortgage payments (or the monthly mortgage servicing ratio) could rise c22%. The Barclays Research rates team expects benchmark rates to remain low."

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